Aeolian Shipping SA v ISS Machinery Services Ltd (The “Aeolian”) - Court of Appeal (Potter and Mance LJJ and Sir Martin Nourse) - 20 July 2001

Conflict of laws - Rome Convention - Claimant threatening to arrest defendants’ vessel because of defendants’ breach of turbo-charger supply contract governed by Japanese law - Defendants’ P&I Club putting up conventional guarantee containing agreement that claim should be determined by reference to English law - Whether guarantee to be construed as agreement that turbo-charger contract should be governed by English law

The claimant sued under an agreement (“the spares contract”) for the supply by the claimant to the defendants of replacement parts for a turbo-charger previously purchased from the claimant for installation in the defendants’ vessel Aeolian (“the turbo-charger contract”). The defendants admitted that they had not paid the price, but sought to set-off a counterclaim for damages for breach of a term as to the quality and durability of the turbo-charger said to be implied in the turbo-charter contract. The turbo-charger had suddenly failed a little over a year after it was purchased by the defendants, as a result of which the defendants urgently needed to obtain replacement parts.